To be eligible, an employee has to render his/her services for 5 continuous years. Employees have to complete 5 years of service to be eligible – If the number of employees of the same organisation reduces to under 10, it will still have to pay the gratuity, as per regulations of the Act.Ģ. Organisations with a workforce of 10 employees on a single day in the preceding 12 months are liable to pay gratuity. Gratuity is payable if an organisation employs 10 or more individuals – Rules pertaining to the applicability of gratuity are mentioned below –ġ. Private organisations can come under its purview subject to fulfilment of certain conditions. The act was passed by the Parliament on 21st August 1972 and came into force on 16th September the same year.Īll central and state government departments, defence, and local governing bodies are covered under this act. The gratuity rules are mandated under the Payment of Gratuity Act, 1972. Gratuity is a lump sum amount that employers pay their employees as a sign of gratitude for the services provided.
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